Australian machinery market continues to soar

Australian new machinery sales grew by a whopping 16.5 percent in 2016 after totalling an impressive $2.18 billion, making it the ninth consecutive year of $1 billion-plus sales.

These impressive figures come after a fruitful 2015 which saw $1.871 billion in sales.

In a passionate address to the TMA conference last week, Agriview managing director Alan Kirsten announced individual records and growth for tractors, combine harvesters, sprayers, balers, hay tools and windrowers.

New tractors have posted the largest number of sales since 1985, according to Kirsten.

A total of 11,729 tractors were sold in 2016, marking a 2.1 percent increase on 2015 and the sixth consecutive year in which the market has exceeded 10,000-plus sales. Tractor sales have averaged 11,119 per year since 2012.

Kirsten says the demand of our produce from overseas nations, in particular to Asia, and the cost of money are large factors driving the sales spikes.

"From a rural perspective we are seeing record levels of farm production and exports which are being fuelled by increasing demand for our produce from international markets particularly to our north," he says.

"China, ASEAN and other Asian countries combined account for just under 50 percent of our agricultural exports at the moment and it is clear that Australia’s farmers are investing to meet the growing demand.

"To me it comes down to the cost of money – it’s never been cheaper to upgrade," Kirsten adds.

"It is also very apparent that the low borrowing costs are now playing a big part in terms of when machines are changed over.

"It is clear that, irrespective of droughts, flooding rains, exchange rates, commodity prices, world stocks and so on, when the lease is up it’s time to upgrade and these cycles are becoming evident in the market."

The last time Australia’s agriculture market produced five continuous years of 10,000-plus sales was between 1979 and 1985, according to the Tractor and Machinery Association of Australia’s (TMA) State of the Industry report.

The total value of new tractor sales for 2016 reached $1193.8 million, which is nearly a nine percent (8.7) increase on the previous year.

Combine Harvester sales have also tumbled records, with sales well above the decade’s average of 716 units, with 869 sold during 2016.

This accumulated a total value of $510.4 million; a 23 percent jump from 2015’s harvester values, and becomes the best year of sales since 2012, a surprising outcome according to Kirsten.

"This is quite remarkable given that the number of grain-producing farms has decreased quite a lot over the last 10 or so years," he says.

Hay tools, balers and windrowers have also experienced good seasons, making a total of $202.2 million; this is a 19 percent rise on 2015’s $170.2 million year and emphasises the substantial growth that the market is experiencing.

Breaking them down individually, balers increased 17 percent to $109.5 million and hay tools rose by 17 percent to $67.4 million. Thanks to strong demand, and despite two years of decline, the windrower market rose an impressive 35 percent to 25.3 million – up from 18.8 million in 2015.

Around the country: Queensland saw its third best tractor sales year in the past 28 years, selling 2590 units, a 2.4 percent increase on the previous year.

Tractor demands in New South Wales reached record levels according to the TMA report, with 3738 tractors sold, beating 2015’s record year of 3278 units. NSW hasn’t seen tractor sales that high in the past 28 years.

Victoria did see a slight drop in 2016, with 2746 tractor units sold, a fall of just under 10 percent. Despite this lull in sales, 2016 was still a top-five year for tractor sales since 1989.

South Australia built on its big 2015 with 1,062 tractor units sold; the past two years have been two of the best for SA since 1989.

Tasmania recorded a total of 328 new tractors, and sits above its five-year average.

The Northern Territory is the only market which saw a drop in tractor sales, with only 102 units sold in 2016 compared to 2015’s 140.

And finally, Western Australia recorded its fifth year in a row of 1000-plus sales. A four percent increase on 2015 was seen in the West, with 1159 tractors sold, a rise of 14 units.

How is 2017 looking?

Tractor sales are up 11 percent for the first half of 2017 with 6327 tractors sold, which is the best first half since 1985. All regions are up except for Western Australia.

"So 2017 so far is all good news … it keeps on going," says Kirsten, who is forecasting a 12,000-plus tractor year for 2017, even suggesting a possible overtake of 1985.